What Is the Effect on the Price and Quantity of Wooden

question 245

Multiple Choice

What is the effect on the price and quantity of wooden desks of a rise in the price of wood?

• A) The equilibrium quantity of wooden desks increases and the equilibrium price falls.
• B) The equilibrium quantity of wooden desks increases and the equilibrium price rises.
• C) The equilibrium quantity of wooden desks decreases and the equilibrium price falls.
• D) The equilibrium quantity of wooden desks decreases and the equilibrium price rises.

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Definitions:

Market Rate

The prevailing rate of interest available in the marketplace for securities or loans.

Bond Issue

The process of offering bonds for sale to investors by an issuer as a method of raising capital.

Discount

A reduction in the normal cost or price of a product or service, or the amount by which a bond is sold below its face value.

Amortization

The process of spreading the cost of an intangible asset over its useful life, thereby reflecting its consumption, depletion, or expense recognition over that period.